The SEC's Facebook Fiasco

Goldman Sachs announced this week that it will exclude U.S. investors from the opportunity to invest in new shares of Facebook. Instead it will sell the shares exclusively to foreign investors. This has been portrayed as a victory for the Securities and Exchange Commission. And as Andrew Sorkin wrote in the New York Times, it is "considered a serious embarrassment for Goldman." It is the SEC that should be embarrassed.

Goldman's move shows how banking has become so international that companies can sidestep the...